Press Release: Beware of placing transformation before job creation in tourism sector

Today President Ramaphosa will address the launch of Tourism Equity Fund, which was established by the Small Enterprise Finance Agency (Sefa) in partnership with the Department of Tourism ‘to drive transformation in the tourism sector’ via ‘a new financial support mechanism to stimulate investment and transformation in the tourism sector’.
 
The official media announcement of the launch goes on to say that the fund “is aimed at creating an inclusive and growing tourism sector by supporting entrepreneurship and investment on the supply side of the tourism sector. The fund will offer a combination of debt finance and grant funding for large capital investment projects in the tourism sector.”
 
There is undoubtedly a need for inclusivity in every area of the economy, but the critical objectives are growth and the creation of jobs. The government runs the risk of being tone deaf if it makes the mistake of emphasising ‘transformation’ in tourism at the expense of growth and jobs.
 
The tourism sector is one that has been hardest hit by the Covid-19 pandemic and the subsequent lockdowns, with countries the world over sharply restricting international travel, and domestic regulations severely curtailing business activity. Commenting on the difficulties faced by the tourism sector, Liesl Matthews, one of the owners at Southern Destinations travel agency in Cape Town, told international broadcaster Deutsche Welle: “Our arrival numbers are still incredibly low – they’re 90% less than the previous year.”
 
In this context, addressing the sector-wide crisis rather than merely ‘transformation’ must be the focus of the Tourism Equity Fund.
 
President Ramaphosa’s own Economic Reconstruction and Recovery Plan identifies tourism as one of the key priorities in bringing the economy back to life. The plan notes that “(the) tourism, cultural and creative industries were among the hardest hit by COVID-19. Accordingly, efforts aimed at ensuring these sectors’ recovery and growth will form an integral part of the overall reconstruction and recovery effort.”
 
Focusing on transforming rather than reviving the tourism sector will deflect attention from what is really needed – in the same way that the government’s decision last year to use the Broad Based Black Economic Empowerment (BBBEE) scorecard to determine the beneficiaries of the Covid-19 tourism relief fund was a regrettable and divisive response to an industry-wide crisis.
 
What the tourism sector needs is for the government to create an environment in which it can once again be a driving force in the economy, as it was prior to Covid-19, when it accounted for 8.2% of all economic activity in 2018. This means that the government has to stop Blatant Elite Enrichment (BEE), because it strangles productivity, kills businesses, and costs jobs. Moreover, it has failed to empower the vast majority of black South Africans, who are its intended beneficiaries. The only thing it transforms is the bank balances of politically connected elites.

  
Media contact: Hermann Pretorius, IRR Head of Strategic Initiatives – 079 875 4290; hermann@irr.org.za

Media enquiries: Duwayne Esau, IRR Strategic Communications Officer – 081 700 0302; duwayne@irr.org.za
Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za
Kelebogile Leepile Tel: 079 051 0073 Email: kelebogile@irr.org.za
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